NBA, MLB Rethink Liquor, Gaming Deals

Beleaguered Sports Leagues Warm up to Taboo Categories

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NEW YORK (AdAge.com) -- In an effort to unearth new revenue streams as sponsors pull back on budgets, at least two professional sports leagues are aligning with categories that were previously considered taboo -- drinking and gambling.

Rick Schlesinger, Milwaukee Brewers' exec VP-business operations
Rick Schlesinger, Milwaukee Brewers' exec VP-business operations Credit: Rick Wood
The National Basketball Association has voted to rescind its ban on courtside advertising from hard-liquor brands, giving individual franchises a major new category in the search for marketing partners, and potentially opening the door for the league itself to strike a deal with a spirits maker.

In the meantime, Major League Baseball -- perhaps the most sensitive of the team sports since it has been stung by gambling problems in the past -- has slowly warmed to partnership deals between its franchises and the gaming industry. Last week, MLB signed off on a deal in which the Wisconsin-based Indian tribe Potawatomi Bingo Casino will become the presenting sponsor of the Milwaukee Brewers.

The loosening restrictions enable the leagues to tap into the sports-marketing budgets of two giant industries that together command $117 billion in U.S. sales.

"This is huge," said Tim Calkins, professor-marketing at Northwestern University in Evanston, Ill. "I think this is just the beginning in terms of creative marketing by the sports leagues," he said. "A lot of traditional sponsors are hitting hard times."

Straddling line
"We just had some owners meetings in Phoenix and certainly there was some sobering news; clubs are bracing for declines in revenue," said Rick Schlesinger, the Brewers' exec VP-business operations. "We have to be respectful of our brand, respectful of the Major League Baseball brand, and understand we're family-focused entertainment. But we also have to expand our reach and tap into unconventional sources of income."

Gaming is a $62 billion a year business in the U.S., according to the American Gaming Association, including the American Indian tribal-run casinos such as the Potawatomi, based in Wisconsin not far from Milwaukee. The deal is for a wide-ranging presenting partnership -- Milwaukee Brewers Baseball Presented by Potawatomi Bingo Casino -- that includes what Mr. Schlesinger called "every element of our marketing machine, from print to radio to TV, signage [in the stadium, on top of the dugouts and in the parking lot of Miller Park], tickets and hospitality."

Mr. Schlesinger declined to give the parameters, but said it was a multiyear pact second only to the team's naming rights deal with MillerCoors, which is valued at $2.06 million per year.

Baseball rules still prohibit the sponsorship from going further. The Brewers can't, for example, offer a promotion for fans to use their ticket stubs to redeem gambling chips at the casino, nor can individual players promote the venue. And if there's any league that is sensitive to the gambling element, it's baseball.

Gambling scandals
The sport suffered through the 1919 "Black Sox" scandal, when several players on the heavily favored Chicago White Sox accepted bribes to throw the World Series against the Cincinnati Reds. In 1983, then-Commissioner Bowie Kuhn banned legendary players Mickey Mantle and Willie Mays after they were hired to do promotional work at Atlantic City, N.J., casinos (the ban was later overturned). Then, in 1989, Pete Rose was banned from the sport after he was found to be betting illegally with bookmakers on baseball games.

As for liquor advertising, the NBA is joining MLB, the National Hockey League and Nascar in permitting spirits brands to advertise within camera view. The National Football League remains the lone holdout.

The NBA voted to overturn the ban at its sales and marketing meeting earlier this month, allowing teams to draw from a $55 billion-a-year U.S. business. An NBA spokesman said, "The vote just happened, so we don't know how it's going to play out. We haven't structured it yet, so we don't know what it's going to mean for teams in terms of in-arena advertising, outside ads, ticket signage, website ads. ... We're working on it now."

Nascar broke the ice on hard-liquor ads four years ago, a decision that brought the sport two key sponsors in Diageo and Brown-Forman, but drew criticism from public-advocacy groups. The NBA can now expect some of that backlash. "It is not something we will let pass unnoticed. We will be contacting the NBA," said George Hacker, who heads the Alcohol Policies Project at the Center for Science in the Public Interest, who called it an "act of desperation" on the part of the NBA.

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